CZECH ACQUISITION EXPANDS DOW EUROPE ACRYLICS POSITION
CZECH ACQUISITION EXPANDS DOW EUROPE ACRYLICS POSITION MIDLAND, Mich., Nov. 15 /PRNewswire/ -- Dow Europe and the Czech
Ministry of Industry have signed an agreement in principle allowing Dow to become the foreign partner in the privatization plans of Chemicke Zavody Sokolov a.s. (CHZS).
CHZS is a Czechoslovakian chemical company located in Sokolov, 150 kilometers west of Prague. Its product range includes acrylic acid and esters, acrylate latexes and hydrogen peroxide. CHZS employs around 1,300 people and its turnover was $80 million in 1990. Under the agreement, Dow will acquire a 51 percent shareholding in CHZS and has the option to increase its shareholding to at least 90 percent within three years in a total transaction valued at approximately $100 million. Upon completion of the final purchase agreement, Dow will assume direct management of the business and operations of the company, and will sell CHZS products through the existing Dow and CHZS commercial networks. CHZS owns acrylic acid and ester plants, built in the early 1980s, with an acid equivalent capacity of 25,000 metric tons per annum (MTPA) which will be expanded to 50,000 MTPA by 1994, all based on technology licensed from Mitsubishi. Other plants include a 30,000 MTPA acrylate latex plant, a hydrogen peroxide plant based on technology licensed from Ericsson, and formic acid, sodium chlorate and white corundum plants. The agreement calls for substantial new investments at Sokolov, particularly in specialty products and infrastructure improvements. "Dow was selected after very careful scrutiny of a number of foreign company proposals," said Miroslav Krejci, managing director of CHZS. "However, Dow made the greatest commitment to Sokolov and provided the feedstocks and market access we need. With Dow, I am sure Sokolov will be able to enjoy sustained growth in the coming years." Dow sees the move as an important step to reach its strategic objectives in terms of both geography and market penetration. "The acrylic chemistry is key to us," said Jack Helfenstein, executive vice president for Hydrocarbons, Chemicals and Performance Products, Dow Europe. "Sokolov will be the only Dow-owned acrylate monomer facility in Europe. We have feedstocks, the technology fits, and this acquisition of a specialties plant together with modern acrylic facilities is an excellent opportunity both for vertical integration and for development of our presence in the acrylics market. With Sokolov, we can integrate a new facility in the structure we have built to serve specific markets and customers," Helfenstein said. "This is particularly true of acrylate latexes, which are a key element in our growth strategy," he said. "Dow Europe recently began the construction of a new, dedicated facility at its Rheinmeunster site to meet the needs of this diversified, high-technology market, and the Sokolov acquisition fits ideally in this strategy. It brings us capacities which fit well, it brings us synergism, and it brings us additional markets and opportunities." "Eastern Europe will undoubtedly become a large and significant market for chemicals," commented Vin Sinnott, vice president and general manager for Dow's Eastern Europe, Middle East and Africa region. "Sokolov is ideally suited to serve this market both today and through expansions and new ventures. Both Sokolov and our Donichem venture in Hungary for Styrofoam brand insulation provide Dow with manufacturing sites in two key countries expected to spearhead the growth of Eastern Europe's economies," he said. "I believe that Sokolov has many of the attributes that could make the site an excellent competitive base," said Richard J. Fieler, Dow Europe's executive vice president for Operations. "Its newer facilities operate with good process technology, its infrastructure is adequate and can support additional plants. Feedstocks can be sourced locally or from other Dow sites. There are R&D facilities which complement our own activities. I expect that Dow's managerial and technical skills will rapidly bring Sokolov to a level where it can compete successfully with other specialties sites that we operate in Europe, and that it will become a key source of Dow specialties for Eastern Europe over the next 15 to 20 years." According to Hans Zinggeler, vice president for Human Resources, Dow Europe, "Dow will bring in a small team of experts to reinforce the existing management structure at CHZS and facilitate the company's integration into the Dow world." -0- 11/15/91 /CONTACT: Jack D. Eadie of Dow Chemical, 517-636-0517/ (DOW) CO: The Dow Chemical Company; Dow Europe; Chemicke Zavody Sokolov a.s. ST: Michigan IN: CHM SU: TNM ML -- DE004 -- 1371 11/15/91 09:00 EST
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|Date:||Nov 15, 1991|
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